The Farm CPA

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

Watch for a State Capital Gains Deduction for the Sale of Farm Assets

Sep 08, 2011

We had a reader ask the following question:

"Does Iowa have a reduced capital gains tax rate on sale of farmland held for 15 years?"

If certain qualifications are met, such as holding the farmland or assets for at least 10 years and material participation in the farm (cannot cash rent the land), Iowa does have an exclusion of 100% of the capital when selling your farmland or other farm assets. This also applies to other business-related assets, not just farmland.

I also know that Oregon had a capital gains exclusion for the sale of farmland, although that may no longer be there.

The key when analyzing your total capital gains tax is to review your state requirements to determine if there is a qualified deduction for the sale of farm assets. Many states have these exclusions, but there are almost always different rules for each state.